And so I came with that idea, yesterday: that centre for experimental research that I want to create could act as an investment fund (see Loin dans le domaine d’idées originales). I take a prototyped technology, very roughly adapted, or even not adapted at all to being used by the non-initiated, and I run it through experimental research in order to discover behavioural patterns in users as they try to figure out the best way to handle the prototype. In other words, the experimental centre transforms something promising but essentially not marketable (yet) into something marketable. If the creators of this technology have no money to finance the research, my centre can act as an investor and take a participation in their venture.
It seems interesting, and I feel that in my process of concept-pitching I have come to the point where a bit of hammering and stretching would be useful. By hammering I mean trying to look at my own idea in a negative, essentially sceptical way, asking the type of questions that someone really mean would ask. In other words, hammering means criticizing and trying to find weaknesses in my idea. On the other and, stretching an idea consists in artificially hyperbolizing its different aspects, and seeing what happens. Thus, I start hammering. Why would any high-tech company use the services of such an experimental centre? What is the point for them? After all, they have their engineers and their market researches. Good point. Assuming that any high-tech company would be interested in the services of my centre would be preposterous. I have already profiled some typical customers for this centre, and I can logically argue that using the services of the centre would be interesting for them. Type #1 is a team of engineers who either have just started a business around a technology they invented, or they are about to start. The technology is in a prototyped phase, i.e. it has the essential functionalities it is supposed to have, but the external appearance to the user (interface, fool-proof devices, customer support etc.) is still not quite marketable. For this type of customer, my experimental centre would be a facilitator in the process of launching their product. Type #2 is an established provider of technologies, who can easily notice that something in their customer relations is deteriorating, e.g. the payment lag in commercial receivables is stretching disquietingly, and they attribute this negative change either to the properties of some freshly introduced technology, or to the behaviour of their engineers. The value added that my experimental centre can provide to those customers consists in both optimizing the utility of their technology for the customers, through behavioural testing, and in training their engineers in responding to customers’ observable behaviour. I intuitively guess that Type #1 businesses would make the bulk of my customer base in like the first 2 – 3 years of existence in that experimental centre, maybe even longer. Only as some reputation will have been built, big players of Type #2 would come.
That precise question I am hammering my idea with, right now, has two other aspects. When I ask ‘Why would anyone use the services of my experimental centre?’, the ‘Why?’ hides two other questions, namely the ‘how?’ and the ‘what for?’. The ‘how?’ means ‘How will those customers know about you and how will you form relations with them?’. That venture of mine is at the limit of science and investment, and so I gather there should be some kind of marketing in both fields: scientific conferences, business conferences and congresses etc. The customer Type #1 is more likely to develop an interest in working with my centre at some sort of start-up congress, or even in a start-up incubator, which, by the way, could be a separate product of this experimental centre. As for customers Type #2, they will probably get in touch of their own initiative, they just have to be aware of our existence, and it should be that kind of persistent, dependable existence, sort of ‘Those guys are just there when we need them’.
The ‘what for?’ translates into the direct, tangible gain my customers would derive from using the services of my experimental centre. Type #1 customers will gain by making their technology (more) marketable, which they should find, sooner or later, in their balance sheet, under the heading of ‘equity’. I mean they will be able to find more investors, or keener investors, or just less mean investors, with good behavioural a pitching of their technology. They would have a capital gain. Additionally, a technology well-tested from the behavioural side can help in optimizing their business processes. Type #2 customers could expect better customer relations, thus shorter payment lags in commercial receivables, possibly better prices with their customers. The former means lower a circulating capital engaged in receivables, the latter means better a gross margin. Once again, those Type #2 customers would have both a capital gain, and an operational gain. The (partial) moral of the fairy-tale is that prices in my experimental centre should be calibrated so as to be proportional to those two types of gains.
Good. That first round of hammering has allowed me to form a vision of development for my experimental centre. It should start as an incubator of small start-ups in smart technologies, possibly focused on the environment of a smart city. The incubator would offer both the experimental environment for testing, pitching and developing those technologies, and the capitalist structure of an investment fund to finance those ideas. A few years of working in this business model will hopefully allow developing an outstanding research capacity, which, in turn, will make the centre competitive enough for working with the big players of smart technologies. It is possible to attract the attention of one among those big players right from the beginning, as a strategic investor in the centre. On the other hand, such a big player could be interested in spinning the most advanced and the least customized technologies out of its own structure and form some kind of joint-venture with my experimental centre.
I am moving on with hammering and I am asking myself another mean question: why should anyone invest in this centre? what’s in this business that other businesses don’t offer in terms of return on investment? Good question. My personal vision, which I started to develop in my last update in French (see Loin dans le domaine d’idées originales) is that my experimental centre would be representative for a whole class of businesses, observable right now, which invest heavily in the development of new technologies, without necessarily making profits. The whole idea is to have claims on the future proceedings of those promising technologies. Thus, as I am pondering the question now, the interest an investor could have in putting their money into my business would be to acquire indirect control over or participation in a range of highly promising technologies. The price(s) my customers would pay on a current basis could make the basis for an operational profit, but not necessarily.
Still, this particular hammering question hides another one underneath. Stands to reason: I am being mean to my own idea, it is just as usually when people are mean. They are mean for many reasons. Anyway, that kind of hidden question is: why should investors put their money in my experimental centre rather than in another experimental centre? Honestly, I can hardly give any reliable answer to this one right now. I need reviewing some of the most up-to-date behavioural research, sort of ‘what kind of fancy methodology are we wearing this year?’. This is a topic for a separate update on this blog. See? This is how you can creatively corner yourself, when asking yourself mean questions about your own ideas.
And so I come up with the last hammering question I could come up with: why a centre? Why not a dispersed structure? Couldn’t we imagine some sort of movable technology, possible to put anywhere, like in the middle of a smart city under construction, and serving to run behavioural tests on new technologies? Good question, once again, and honestly don’t know what to answer. Maybe it is possible. If it is, then my business idea can take new colours. Now, I see that one of the next steps I need to make on my journey with this dream of mine is to study the state of the art as for behavioural experiments.
The cursory hammering of my concept brought me a vision of development, and a tough question to study. Good, this is what a good hammering should bring. Now, I pass to stretching. In heuristic terms, the stretching of an idea means, in a first step, expressing it as a finite set of dimensions (as a vector, if you want), and then extending it along each dimension separately. For the moment, I can see two scalable dimensions in my concept: the size of participation, and the technological scope. As for the size of participation to take in those technological start-ups that my experimental centre would take under its wings, it can technically range from a minority interest (like 5% of equity), all the way up to 100%, and possibly with a beach head in their liabilities (the German style: invest in a business and lend them money in the same time). I guess that if the input of my experimental centre is partly intangible, as behavioural know-how, then I’d better have control over the further implementation of that know-how. Still, as my research centre will gather experience and momentum, it is possible to accumulate some kind of meta-knowledge about technological start-ups in general, and build a portfolio of passive, profitable, minority participations, just as a source of cash.
Regarding the range of technologies to be studied, one extremity of the scale would be like focusing on one, very precise technology (e.g. smart balancing of energy in a local power grid). The opposite end of the spectrum would be a crazy place, where people can book like experimentation rooms on an hourly basis, they come in with their prototype and some other people, keen to be their Guinea pigs (by the way, my centre could offer them our own Guinea pigs), and they just to some behavioural testing of their own. This end of the spectrum looks really practical, workable and possible to implement right from the start. It could help paying the bills of that centre. As for the super-narrow focus, I am intuitively ebbing away from it. Maybe, if we have like a whole bunch of start-ups to give a kick-start to, and all of them in the same technological field, then, maybe… Still, the comparative advantage I intuitively perceive in my concept is the capacity for behavioural testing as such. Broader, faster, cheaper etc.
What you could have just seen, in my writing, is what Frank Knight used to name ‘thinking about thinking’. In his book entitled ‘Risk, Uncertainty and Profit’, first published in 1921 , Frank Knight argued that people who are successful in business have the ability to be both passionate and distanced about their ideas, and thus they can put both passion and cold calculation to work, in the same time. I am testing my capacity in this respect. I am reviewing the whole process that has brought me to the here and now of my business thinking. By the first days of January, 2018, I formulated for the first time my concept of creating, like that, from scratch, a business connected to the phenomenon of smart cities (see for example Une courbe élégante en « S » aplati ). Then, I started turning and returning that idea, and I initially studied smart cities in general (see My individual square of land, 9 meters on 9 or Le cousin du beau-frère de mon ami d’école as well as Smart cities, or rummaging in the waste heap of culture ). In the meantime, I had been working on another idea, namely on designing economic experiments for the sector of FinTech. Together with a friend of mine, we are writing a book about FinTech, and the topic is so turbulent that it just beckons me to think in experimental terms. Thus, for like 8 weeks, I have been ruminating those two ideas sort of side by side, and then, on the 23rd of February, the coin dropped, finally: I realized that the business I want to create is an experimental centre for behavioural research on the interaction between humans and smart technologies (see And so I ventured myself into the realm of what people think they can do). Finally, this Sunday, I mean the 4th of March, I decided to do some benchmarking for this concept, i.e. finding some real businesses and organizations and study them, to have an idea what my organization could look like. That little round of benchmarking brought me to the conclusion that pairing this research centre with an investment fund could be really interesting (see Loin dans le domaine d’idées originales).
Now, the dots in my head are connecting at growing a speed. This whole process of inventing a business, as I am considering it now, is like some sort of accelerating learning. I started slowly and gently, and then, after 8 weeks of crystallization, ideas started taking shape really fast.
I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. You can consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?